Compensation of €12.9m paid to members of collapsed credit union

State’s deposit guarantee scheme was invoked on July 2nd

Collapse of Drumcondra Credit Union marks the fifth time the deposit guarantee scheme has been invoked. Photograph: Colin Keegan/ Collins Dublin

Collapse of Drumcondra Credit Union marks the fifth time the deposit guarantee scheme has been invoked. Photograph: Colin Keegan/ Collins Dublin

 

Compensation of about €12.9 million has been paid to members of Drumcondra and District Credit Union following its collapse earlier this month after efforts to fold its business into a stronger peer failed.

Payment by cheque has been issued to 4,600 members of the Credit Union while the total compensation represents over 95 per cent of eligible deposits covered under the State’s deposit guarantee scheme, according to the Central Bank of Ireland.

The deposit guarantee scheme protects up to €100,000 per depositor per credit institution authorised in the Republic.

The Central Bank noted that, in certain cases, the scheme may require additional information before payments can be made, “for example, in the case of a deceased member’s estate or if updated address details are required”.

The scheme was invoked on July 2nd when provisional liquidators were appointed to the credit union. The north Dublin lender was unable to secure enough funding to bolster its financial position to complete a merger.

Last year, the organisation, more commonly known as the Drumcondra Credit Union, told its members they would have to reduce their savings to €15,000 as part of a move by a number of credit unions to impose maximum deposit limits at a time when the sector was struggling to lend on money.

Past bailout

Four years ago, Drumcondra needed a bailout from the Irish League of Credit Unions to restore its capital level to the minimum regulatory requirement of 10 per cent of total assets, after suffering “considerable impairments” to its assets, the Central Bank said. These related primarily to its premises.

The collapse of Drumcondra Credit Union marks the fifth time the deposit guarantee scheme has been invoked.

The Central Bank said members should start receiving their payments “shortly”.